Industrialization in developing countries: is it related to poverty reduction?
This paper proposes an empirical framework that relates poverty reduction to production growth.
We use the GGDC/UNU-WIDER Economic Transformation Database to measure the contribution to growth of productivity improvements within sectors and structural change—the reallocation of workers across sectors—for 42 developing countries from 1990 to 2018.
Next, the contributions are used in a regression analysis, which indicates that poverty reduction is significantly related to structural change and productivity growth in manufacturing.
An attribution exercise suggests that structural change and agricultural productivity growth account for a substantial share of poverty reduction in developing Asia and sub-Saharan Africa, and that productivity growth in manufacturing accounts for poverty reduction in developing Asia, but not in sub-Saharan Africa.